8 June 2015

Amanda Palmer, potato salad, and the power of crowdfunding


I am now the employer of my favourite musician.

Well, kind of. I have signed up for Patreon, and am funding singer-songwriter Amanda Palmer, with $10 gifts every time she releases a new piece of content. I am one of (currently) 4809 patrons, all signed up for different amounts, meaning that Amanda gets paid $31,838.54 for each new song. With this money, she can pay her band, rent out recording studios, hire production teams for music videos, and manufacture and send out merchandise to her fans. She can also afford to live, without taking a part-time job or signing her soul away to a record label.

At this point, crowdfunding is hardly a new concept. What started off as a new way to raise money for charity (via sites like JustGiving and GoFundMe) quickly became a platform for artists, designers and entrepreneurs to source investment directly from ordinary people, rather than banks or venture capitalists. The most famous platform is probably Kickstarter, which has sponsored projects ranging from the full-length feature movie Veronica Mars, to innovative smartwatch Pebble, to a potato salad party which raised over $55,000. Individual people on the internet now fund new technologies, albums, films, start ups, video games, books, live shows, and potato salad parties. To date, Kickstarter users have funded 86,322 projects and pledged $1,754,004,099.

Aside from the fact that that’s 1.7 billion dollars, here’s why this is important: this is the heart of the sharing economy. Most of the attention seems to focus on Uber (which is essential the sharing economy poster-child) and AirBnB. This makes sense: people are generally accustomed to using taxis and booking hotel rooms, and while the format of these companies has revolutionised the supply side, they are fulfilling a demand that was already there. The user-experience of Uber may be more convenient, quicker, or cheaper than the traditional alternative, but what you are actually paying for is a better version of what already existed.

Crowdfunding takes this to another level. Consumers don’t have to hope that a record label or film studio will chance upon the projects they want to see happen – they can do it themselves. If there’s enough demand (in the form of donations), the projects will happen. Industry gatekeepers lose (some of) their power to the people actually paying for the service. It’s a direct market transaction with no middlemen in the way to raise costs or dictate what can and cannot get made. It’s popular capitalism in the most basic sense.

Amanda Palmer made headlines in 2012 when she ditched her record label and raised $1.2 million to fund her new album, the highest-funded music project at the time. Her subsequent TED talk on “the art of asking” went viral, and turned her into an internet sensation outside of her indie music fan circle. She’s been surrounded by controversies ever since. But this isn’t about her. It’s about the sharing economy, peer-to-peer transactions, and how that can go a lot further than staying in a stranger’s spare room rather than a hotel.

Patreon is notably different from Kickstarter and other crowdfunding platforms. Rather than funding a one-off project, users (or rather, patrons) can sponsor an artist long-term, either paying per month or per piece of content released. Some have likened it to monthly charity donations or to subscribing to a magazine, but neither of those is quite right. It isn’t charity – patrons aren’t ‘giving’ away money, they’re paying for one side of a transaction. And they’re not buying content either like subscribers to The Times are. They – we – are paying Amanda Palmer’s salary, in $1, $5, or $10 instalments. In this way, I have gone from being Amanda’s fangirl to one of her employers.

The implications of this are huge. If individuals can fund artists they like directly, why not other content providers? What about funding medical labs working on new antibiotics and genome sequencing, technology companies enhancing 3D printing techniques, science researchers investigating graphene, and energy start ups making renewable energy economically viable? If governments can’t afford to fund research and development, and large corporations don’t have incentives to focus on some of the most important projects, then why not us? What if we could crowdsource our way out of some of the biggest challenges facing the world?

I am not the only one with this idea. Elon Musk, the pioneer behind PayPal, Tesla and SpaceX, has taken crowdfunding a step further and is crowdsourcing his Hyperloop project, a transport system that will take 30 minutes to travel from San Francisco to Los Angeles (a journey which currently takes nearly 6 hours by car and 10 hours by train).  100 engineers all over the country have signed up to work on the project.  Anyone with relevant skills or resources who wants to see the project happen can help support it, no lobbying government officials or pressuring corporations needed.

Back to reality and the present day. One of the most important features of Patreon is that patrons can end their commitment whenever they want. If they no longer like what the artist is producing or just don’t want to support them anymore, they just stop. If enough people stop, that’s a big incentive for that artist to reconsider – have they stopped making the kind of art their fans wanted, or have they done something their fanbase finds offensive? If so, they can respond. Direct funding leads to direct accountability. You can’t demand your money back if you didn’t like a film or album, and most of us don’t bother with letters of complaint. With Patreon patrons have a clear line to the person they’re funding.

It’s a step too far to suggest we should crowdfund our government, if we don’t want to end up in a plutocracy where money buys political power. But maybe it’s worth considering how the power of peer-to-peer transactions could be used for local initiatives, such as the upkeep of parks, community centres and libraries. And maybe if politicians started treating the electorate the way artists on Patreon their supporters, as one side of a constantly evolving transaction, we might improve political engagement if nothing else.

It’s easy to view the sharing economy as a fad, a fabricated technology phenomenon, which is all about clever apps and investment bubbles rather than anything genuine. But the peer-to-peer reality isn’t about getting you a faster taxi, a cheaper room, or a part-time assistant who does your laundry on Wednesday afternoons. It’s about making connections, removing middlemen and putting individuals in full control of the transactions they make. And whether people want to fund indie rock musicians, antibiotic research, or potato salad, the sharing economy is enabling us to stop being mere consumers, and to sponsor, decide, choose, create and effect whatever it is we want.

Rachel Cunliffe is Deputy Editor of CapX.